L Zoned Duplex in Seattle

Here is another off-market property for sale in Seattle!

This one is located near 24th Ave NW and NW 61st Street in the hot, hot Seattle neighborhood of Ballard. It is an L1-zoned duplex property on a 3400 sf lot. The house was originally built in 1908 and has approximately 2440sf of finished living space. It has two one-bedroom units and a one-car driveway.

The property is in excellent condition. The roof and skylights are two years old. The house was fully repainted last summer. There are no tenants. The owner lives in the house currently as a single family home.

The minimum terms the Seller would require for selling the property are:

· All Cash

· No seller’s commission

· 15 day close

· 90 days after closing to vacate the property with an option to extend (monthly rent negotiable)

· Sales price of $625,000

If you are interested in getting more details about this property, please send me a private email at HomeLandInvestment@gmail.com



Happy Investing!

Selling Beacon Hill Home

Coming on the market this week!

This vintage home on South Lander Street in Beacon Hill will be coming on the market at the end of this week. Lots of old world charm on the main floor, with three bedrooms and one bathroom, original fir flooring, and 9' ceilings. Exterior has new paint, and various repairs and landscaping have been completed.

The house features a light and bright interior with a formal living room and dining room. One bedroom and bath on the main floor, two roomy bedrooms and large walk-in closet and storage on the upper floor. The total square footage of finished space is approximately 2920.

The spacious kitchen has a butler pantry and gas cook stove. Natural gas heating as well.

There is a fenced backyard, with a beautiful deck right off the dining room.

Watch https://youtu.be/RtXz-hGG-dw to get a better look at the interior spaces.

The upstairs unit has three bedrooms and one bath; and is currently rented through August 2016 for $2300 per month. The downstairs unit was recently developed as a 2-bedroom ADU and will be vacant at the end of this month. It is currently rented for $1400 per month. Permits expired to make it a legal ADU, but the City inspectors have identified it as such. A new buyer will need to complete the permitting process. Live downstairs and collect rent upstairs!

Driveway for off-street parking for up to two vehicles. Plenty on on-street parking for your guests!

Close to the Mt Baker Light Rail Station, El Centro de la Raza, The Station coffee shop, and many other amenities on Beacon Hill.

We have been managing the rentals for this property, but the Owner is now ready to sell. Send a private email to HomeLandInvestment@gmail.com if you are interested in getting more information before the listing hits the market.

Happy Investing!

Seattle Rent Control

Here is a letter I recently received from Seattle City Councilman Nick Licata on rent control in the city of Seattle:

Thank you for writing to the City Council about our passage of a resolution requesting that the State Legislature vote to lift the state ban in support of local control of rent regulations.  That resolution passed the City Council on an 8-1 vote in support.

On Wednesday, October 14, I am going to kick off these discussions of how we move forward in Seattle and Olympia to address the affordable housing crisis, with the goal of providing more information about our desired direction to our Legislative Delegation in time for the 2016 Legislative Session.  I am hosting a discussion in City Hall Chambers at 3pm, entitled:  How have rent regulations worked in the real world? Timothy L. Collins is our guest.  He ran the rent stabilization program for one million housing units in New York City, a metropolis of over eight million people. He has an unmatched grasp of the on-the-ground realities - economic, political, social and legal - of New York City and state rental housing and efforts to keep it affordable.

Housing affordability in Seattle has become a crisis with some of the highest rent increases of major U.S. cities.  Seattle is now among the nation’s ten most expensive cities.  More than 45% of Seattle rental households are now considered rent-burdened.

A 2015 Washington State Housing Needs Assessment found there are only 34 affordable rental housing units in the City available for every 100 renter households who are earning 50% or below of the median income ($31,400 for a single person), and just 15 affordable rental units in the City available for every 100 renter households earning 30% or below of the median income ($18,850 for a single person).

Finally, the Out of Reach Report found that in order for a single parent to afford a two-bedroom in King County, one needs to make $27.21 per hour, or $56,595 a year.

What kind of rent regulations would a lift on the ban allow Seattle to consider?

There are over 200 cities across the country with some form of rent regulation, and each city has tailored their ordinance to fit their housing markets.  Large cities like New York City, San Francisco, Los Angeles, Washington, D.C., and Oakland, California have rent regulations as well as smaller cities like Santa Monica, Berkeley, and West Hollywood, and 100 towns in New Jersey and several in Maryland.  Most offer various kinds of exemptions.  For instance newly constructed buildings can be exempt unless the owner voluntarily opts-in in order to receive a property tax reduction.  These laws also allow for additional exemptions when landlords experience increased costs such as increased taxes, utilities, or capital improvement costs.  Many rent regulation laws also contain hardship provisions to ensure that no building operates at a loss because of these laws.

In other words, one size does not fit all.  Most of these laws are not the kind of laws that most people would consider to be traditional “rent control,” which is being phased out in New York City for instance. Other examples, like laws that close loopholes in local tenant protections and establish better enforcement of the law, laws that require serious code violations to be corrected before rent increases, and laws that prohibit rent increases for seniors in the winter months are all prohibited under RCW 35.21.830, the Washington State law prohibiting all “ordinances or other provisions that regulate the amount of rent.”

Do Rent Regulations Work?

The main arguments are that rent regulations a. lead to high vacancy rates, b. slow new construction, and c. result in deterioration and abandonment.  It’s important to make a distinction between the “first generation” rent control laws passed post-World War I and World War II that froze rental costs from the “second generation” rent stabilization laws that replaced them.  In NYC there are about 38,000 rent controlled apartments compared to about one million rent stabilized apartments.  The term “rent regulated” encompasses both rent controlled and rent stabilized units.

Economist Phillip Weitzman, a former director of research and policy with the New York City Department of Housing Preservation and Development has said, “The existing empirical literature does not take into account the rise of second generation [moderate] rent controls.” A review of cities with these later laws shows that most of the arguments used against regulating rent are associated with these strict first generation rent control laws.  Here are some of the most common.

Myth 1 – Vacancy rates will rise with rent regulations:

• After Boston got rid of its rent regulations the vacancy rate got even smaller – it fell to 2.9 percent, from 4% under rent stabilization.
• NYC, a city with a million rent stabilized units, consistently has vacancy rates that are lower than the rest of the country.

Myth 2 – New construction will slow:

• Most cities exempt newly constructed buildings unless the owner voluntarily participates in exchange for generous property tax abatements (and in NYC most do opt in).
• A New Jersey study done after multifamily housing construction dropped by 77% in the nation and in New Jersey by 88% found that the reduction in New Jersey cities with rent regulations was only 52%.
• NYC’s two biggest 20^th century housing booms occurred under its strictest rent control.

Myth 3 – Deterioration and abandonment will result:

• Abandonment takes place, and at similar rate both in cities with rent stabilization and those without it.
• A Columbia University study by Peter Marcuse concluded that “substantial evidence available from national as well as local studies suggests that there is no correlation between rent control and abandonment.”
• Under many laws, owners are allowed generous rent increases for improvements made to their rent regulated properties. For example, an owner who provides a new $400 in a refrigerator is entitled to a rent increase of $10 per month forever.  And the cost of major capital improvements yields twice as much of their original cost in 14-

Myth 4 – All economists oppose rent regulations.

• The source for this statement appears to originate from a survey of economists who were asked, if they agreed that “a ceilingon rents reduces the quantity and quality of housing available.”
• Moderate rent regulations are not a “ceiling.”
• Michael Mandel, a chief economist with Business Week, wrote: “A price ceiling, as defined by economists, is a uniform ban on selling a product above a certain price…. It is clear that such a policy inevitably leads to shortages. However, rent control laws in the United States are not price ceilings in this sense…these laws will not suppress the supply of new apartments (and may even increase supply).”

A recent LA study found that its Rent Stabilization Ordinance, covering 66% of their rental units, has been successful.   It may be true that rent control and rent stabilization have not solved the housing crisis and that rents are very high in places like San Francisco and NYC, but that is not a result of rent control.  Just the opposite – rent stabilization laws have been eroded in those cities, adding to the unaffordability of housing there.  Changes have included allowing property owners to deregulate apartments once vacant (California) or when the unit reaches a regulated rent of $2,000 and goes vacant or its tenants’ income reaches $250,000 or more (NYC). Later changes further lowered the threshold for high-income decontrol and creating a “vacancy bonus” that allowed landlords to raise rents 20% when a stabilized tenant leaves.  These changes in rent control laws have resulted in hundreds of thousands of units leaving the system in both of those cities.

What is clear is that the market, without regulatory laws in place, does not work. How can one call increasing rents by over 100% and forcing people to leave their homes of twenty years, as well as in many cases leaving their community, a working model?

What can be done to control rents?

The short answer right now is that in Washington State very little can be done. When the Republicans got control of both houses and the Governor’s office in 1980, they banned any form of controlling or limiting rental rates. I worked with the State Legislature this year and last year to try and pass State legislation (supported by the Seattle Times) that would have given all renters in Washington State more notice of large rent increases, but landlords opposed that legislation, so our only option is to try and change the state law to give us the local authority. The Council’s resolution to request the State to repeal or amend the ban will allow Seattle to determine whether there is a policy path that we can design to address our affordability challenges.

Sincerely,

Seattle City Councilmember Nick Licata

Happy Investing!

Seattle Rent Hikes

Sunday’s Seattle Times reported on the issues surrounding rising rents I the greater Seattle housing market.  According to market research firm Dupre + Scott, September’s average rent in the city of Seattle increased 10.3 percent from a year ago to $1495/month.

Ballard led all Seattle neighborhoods with a 21 percent annual increase to $1550/month for a one-bedroom, one-bath unit. Much of these increases are due to new construction of units with greater amenities.

Yet even older apartments built prior to 2011 saw rents up by 7.8 percent, four times higher than the overall inflation rate. Residents in apartment complexes with more than 20 units can expect to see rents increase another 4 percent by March 2015, according to Dupre + Scott.

Bellevue’s asking rents of $1665 are the highest in the metro area, a 6.9 percent annual increase over last year.

Seattle is attracting a number of institutional buyers from outside our region, as the city is considered one of the country’s top markets for multifamily investment.

The Seattle Times article focused on the city’s dilemma in providing affordable housing, but did not address the likely impacts of the City’s new rental inspection requirement, being put in place this year. In addition, City Council is considering a (short-sighted) proposal to require all developers to pay a fee towards the development of affordable housing. Time will tell how that will play out in increasing or decreasing the city’s supply of affordable rental units. Stay tuned.

Happy Investing!

Tenant Repairs

How do you get a tenant to make necessary repairs to a property you own?

My last blog post advertised a house that my development company plans to tear down to make way for a mixed use commercial development at the Rainier Beach Light Rail Station. We closed on it one week ago.

The house was previously rented, but it has been vacant for at least a year, and the yard has become seriously overgrown. It was cited by community residents as a property in need of clean-up, fix-up as part of the Mayor's Community Walk in Rainier Beach last week.

Yet, it will be at least six months before we demolish the house and grounds.

So I advertised it as a short-term rental at the low, low price of $500 per month. I was looking for a handyman or tenant willing and skilled in making house repairs, property improvements, and willing to do extensive yardwork (bids to just clean up the yard ranged from $500-1000).

I was swamped with calls and emails, as would be expected at this price. I had many outstanding applicants from which to choose.

My top candidate is former military, employed by a Security firm. This applicant was willing to pre-pay the six months rent in full, make all necessary repairs and clean-up, and even hire me to help her buy a house at the end of the six months. That is certainly over the top, stand-out from the crowd material! She signed her lease agreement today.

Other investors offer the purchase of a house at a good price to lease-option buyers, who are willing to do all fix-up and repair. So it is possible to do....

Happy Investing!

Free and Clear Property

As a real estate investor, I like to look for properties that have the potential for owner financing. Typically, these are properties that are owned free and clear.

If I get owner financing, I am more likely to buy a house and keep it as a rental, rather than flipping it for quick cash. Owner financing gives me more options for an exit strategy.

I also like to look for properties that are right around the median home price in good neighborhoods, and not on a busy arterial. A three-bedroom, two-bath house is the ideal size. These properties are typically in the highest demand from both buyers and renters. Even better if it comes with owner financing.

So taking a quick look at my favorite Seattle zip code of 98115, the very first house I look at is owned free and clear by an owner who lives out of town in Bellingham, WA. It is a tear-down fixer in Ravenna that has been on the market for 43 days.

The next one in Ravenna, a small two-bedroom, one-bath bungalow is underwater on their mortgage. Maybe they will get the $339,000 that they are asking, but it will cost them at the closing table. I also like to make offers on underwater houses, but more so when they are off-market. That is another whole topic for another blog post.

Let's see if we can find any more free and clear properties. These searches take a bit more work and time, but they are worth it!

Yes, here is a sweet three-bedroom, one-bath Maple Leaf home for under $400,000, that was inherited by the current owner.

And here is a three-bedroom, one-bath home in Bryant, also for less than $400,000, free and clear with an out-of-state owner. He has another one in the same neighborhood listed at $535,000.

Here's one in Maple Leaf that was bought at auction for cash less than a year ago, but just over $400,000 in price.

Here's a 3/2 in Wedgwood that was just reduced in price to $470,000.

So six of the 24 properties for sale in 98115 priced under $700,000 are owned free and clear, making the prospect of seller-financing a possibility.

For a complete list of free and clear properties in your favorite Seattle zip code, please message me privately at HomeLandInvestment@gmail.com.

Happy Investing!

Happy Hour at the Investment Property

Busy! Busy! Busy!
Happy Labor Day Weekend to those of you who are not moving in or out of your new homes. For me, as an investor and property manager, there will be no holiday. I have tenants moving in, tenants moving out, housemates moving in, housemates moving out. It is a wonderful time of year!

Thanks to my friends and colleagues who came to my happy hour open house at my new investment property in Ballard last night - before the new tenants move in. And thanks to my contractors and investors who make it possible for me to do this! Moments like the one pictured to the left make it all the more special.